7min read
PREVIOUS ARTICLE 18 Share Tips - 23 November 20... NEXT ARTICLE 18 Share Tips - 7 December 201...


Michael Gable, Fairmont Equities

BUY RECOMMENDATIONS

GUD Holdings (GUD)


Chart: Share price over the year

The share price of this consumer and industrial products company has fallen to an attractive multiple, and the recent acquisition of Brown and Watson International will support earnings. The joint venture with Jarden is also behind a turnaround in Sunbeam. The share price chart is showing a strong bounce from support, with buy signals triggered on the Relative Strength Index and the MACD (moving average convergence divergence). We anticipate a rally from here, with resistance coming in near $8.20 and then further up near $9. The shares closed at $7.65 on November 25.

Iress (IRE)


Chart: Share price over the year

Recent acquisitions and investment initiatives are expected to result in earnings growth from calendar year 2016 to exceed the guidance recently provided by the company. The stock is looking attractive as a medium to longer term investment and the chart is telling us that it’s time to start buying. Strong support has come in below $9, and bullish action in price and momentum implies upside to $10.50. The shares closed at $9.66 on November 25.

HOLD RECOMMENDATIONS

Commonwealth Bank (CBA)


Chart: Share price over the year

Several weeks ago, we noted a few bullish signals regarding CBA, including a retreat to the long term uptrend line, the almost perfect three wave decline from the high and the buy signal on the MACD. We anticipated CBA to go up and hit resistance at just above $80. Given the recent strength in CBA, we expect the stock to push higher again. We have further resistance near $83 and then $86. The stock finished at $79 on November 25.

Mirvac Group (MGR)


Chart: Share price over the year

MGR is a stock we have held for a few months. It continued to slip back with the rest of the market and into the lows in September. However, as a quality stock, it didn’t dip back like the rest of the market in mid November. Instead, it just continued to rally higher. With news of a recent contract win, the volume is returning and we have seen the short term downtrend being easily broken. MGR should continue to rally higher from these levels. There will be some resistance near $1.93 and again just above $2. The stock closed at $1.905 on November 25. 

SELL RECOMMENDATIONS 

Qantas Airways (QAN)


Chart: Share price over the year

Our philosophy is to buy stocks with strong fundamentals and technical analysis. Regarding QAN, we’re unhappy with the disconnect between the two. We see several issues with the way it’s trading. Price action during the past six months shows a rising wedge. This can be dangerous as a breakdown from this – which appears to be happening – can imply a move back to the base of the wedge. Regarding QAN, this means levels as low as $3 soon. The shares closed at $3.63 on November 25.

Tabcorp (TAH)


Chart: Share price over the year

The chart for TAH shows a broadening formation for much of this year. That is, we are seeing higher highs and lower lows. This can be a negative sign as volatility re-enters the stock, leaving the bulls and bears to battle it out. Any short term rally towards the upper end of the range would be a sell in our opinion. We would only be comfortable with TAH if it was to break free of this volatile trading range. Otherwise, a break under this range could see it head back to the mid $3 levels. The stock finished at $4.62 on November 25. 


Simon Herrmann, wise-owl.com

BUY RECOMMENDATIONS 

Big Un Limited (BIG)


Chart: Share price over the year

BIG is experiencing strong sales momentum. Revenues increased more than 300 per cent in fiscal year 2015. Its recent partnership with CDM Direct Communication Services is poised to accelerate monetisation of its sales pipeline. Big Un Limited offers speculative exposure to demand for video based mobile content. 

iCollege (ICT)


Chart: Share price over the year

iCollege is assembling a portfolio of registered training organisations via acquisitions. The company also operates a cloud based learning management platform. Synergies associated with acquisitions and its partnerships are projected to sustain double digit earnings growth. Even though the company still relies on external capital, our valuation is 22 cents a share based on various models. The shares closed at 9.2 cents on November 26. 

HOLD RECOMMENDATIONS

Bulletproof Group (BPF)


Chart: Share price over the year

An Australian software company providing end-to-end and managed cloud services to business and government customers. Recommended initially in September, we are attracted to Bulletproof’s revenue growth trajectory, strategic acquisitions and recurring revenue streams. Management has a favourable track record in the internet and software industry. 

Real Energy Corporation (RLE)


Chart: Share price over the year

Eastern Australia gas prices have doubled since 2011 and Real Energy is positioned to address a tightening supply landscape. We’re attracted to the scale of its licence holdings and interest received from major regional gas consumer Incitec Pivot. 

SELL RECOMMENDATIONS

Veda Group (VED)


Chart: Share price over the year

Veda’s board has recommended accepting the takeover offer of $2.825 a share from Equifax. Veda, a credit reporting group, closed at $2.76 on November 26. However, Equifax has already upgraded its cash offer once and it appears unlikely there will be a competing offer. No special dividend was declared so time to take a profit. 

The Reject Shop (TRS) 


Chart: Share price over the year

The discount retail chain had a great run in 2015. But given a highly competitive market environment, I believe it’s a good time to lock in some profits and look elsewhere. 

Peter Moran, Wilson HTM

BUY RECOMMENDATIONS

Boral (BLD)


Chart: Share price over the year

Boral’s shares have fallen in recent months as investors attempt to look for an end to the housing boom. However, we believe the sell off in this building products company has been overdone. The current upswing in construction is still below previous cycles and, as a result, we believe there will be further gains in Boral’s earnings. Additional upside may come from the US housing recovery and the possibility of an increase in infrastructure spending.

Shriro Holdings (SHM)


Chart: Share price over the year

Markets and distributes kitchen appliances and consumer products across Australia and New Zealand. We’re attracted to Shriro’s track record of earnings growth, driven by new product development, acquisitions and a highly experienced management team. Shriro recently upgraded its guidance, with fiscal year 2015 net profit after tax now expected to beat the IPO prospectus forecast by 10 per cent. Despite this, the share price was recently trading at a discount to its June listing price.

HOLD RECOMMENDATIONS

Patties Foods (PFL)


Chart: Share price over the year

We’re attracted to the company’s leading savoury brands and the balance sheet is in reasonable condition. However, Patties has been unable to achieve sustained earnings growth because retailer discounting is squeezing margins amid higher input costs. Patties expect a flat result in fiscal year 2016 and we continue to view the share price as fairly valued at current levels.

Telstra (TLS)


Chart: Share price over the year

While Telstra offers an attractive fully franked dividend yield of 6 per cent, we believe the share price will remain flat as a result of limited earnings growth. While Telstra continues to add customers, margins are declining, particularly in the fixed broadband and mobile markets where competitors have improved their performance.

SELL RECOMMENDATIONS

DuluxGroup (DLX)


Chart: Share price over the year

The paint maker’s share price has risen following a better than expected earnings result. However, the result, in our view, was relatively low quality given it was partly driven by lower tax, interest and depreciation. On our forecasts, the company is on a fiscal year 2016 price/earnings ratio of about 20 times, which we see as too high. 

Regis Resources (RRL)


Chart: Share price over the year

Operationally, Regis has been performing well, leading us to increase our gold output expectations following its most recent quarterly result. However, with the share price up 75 per cent since July, and the gold price in Australian dollars declining, we believe the company is overvalued. 

>> BACK TO THE NEWSLETTER: Click here to read other articles from this week’s newsletter